PRA research papers and policy analysis
The Prudential Regulation Authority (PRA) undertakes and supports research to inform evidence-based prudential policymaking. This research spans topics including financial stability, prudential regulation, competition, financial markets, climate-related risks and firm behaviour. Many projects are undertaken collaboratively across the Bank of England (the Bank) and with external academic researchers. A significant proportion of this work is subsequently published through the Bank's Staff Working Paper (SWP) series, peer-reviewed academic journals and international conferences.
Research contributes to policymaking in different ways. Some projects provide analytical tools, data and evidence that support the design and calibration of regulatory policy. Others help evaluate how existing policies operate in practice, including whether they generate intended outcomes or unintended consequences. Research can also help identify emerging risks and opportunities at an early stage, improving the evidence available for future policy development. This complements, rather than replaces, policymakers' judgement and broader supervisory expertise. For a broader discussion of how research contributes to prudential policymaking, see David Bailey's role of research in Prudential Regulation speech, delivered at the IFABS 2026 Conference. In the speech, David discusses how research helps policymakers understand mechanisms, quantify trade-offs, evaluate existing policy frameworks and improve future policy decisions.
This page brings together a selection of PRA-related research papers that have been drawn on repeatedly in policy discussions, speeches, supervisory work, analytical tools and international regulatory discussions. The aim is to make this research easier to find and provide a guide to the different ways in which research has informed prudential policy and analysis over time.
How research can contribute to policy
Contribution | Description | Example papers from the compendium |
|---|---|---|
Quantifying policy impacts | Research that helps estimate the effects of regulatory interventions, supports cost-benefit analysis or informs calibration of prudential tools. | Brooke et al. (2015); Bahaj et al. (2016); de-Ramon et al. (2016); and Mathur et al. (2023) |
Methods, models and data | Research that develops datasets, modelling approaches, measurement techniques, analytical tools or supervisory infrastructure used across the PRA and the wider Bank. | Baptista et al. (2016); de-Ramon et al. (2017); Suss and Treitel (2019); and Bardoscia et al. (2024) |
Policy evaluation and review | Research that studies how policies operate in practice, examines intended and unintended consequences, and informs subsequent reviews of regulatory frameworks. | Peydró et al. (2020); Sakalauskaite and Harris (2022); and Neamtu et al. (2022) |
Emerging risks and future policy challenges | Research that investigates new risks and opportunities before they become central policy concerns. | de-Ramon & Straughan (2016); Amadxarif et al. (2019); and Guin and Korhonen (2020) |
Public goods and wider contribution | Research that contributes beyond the PRA through publicly available datasets, models, academic publications, collaboration with external researchers or international policy engagement. | Baptista et al. (2016); de-Ramon et al. (2017); Acosta-Smith et al. (2019); and Guin and Korhonen (2020) |
Footnotes
- Many papers contribute through more than one of these channels. The examples above are illustrative rather than exhaustive.
Research papers and their contributions
2015
- Martin Brooke, Oliver Bush, Robert Edwards, Jas Ellis, Bill Francis, Rashmi Harimohan, Katharine Neiss and Caspar Siegert (2015), Measuring the macroeconomic costs and benefits of higher UK bank capital requirements (FSP 35): The paper developed a comprehensive framework for assessing the costs and benefits of higher Bank capital requirements. The analysis informed the Financial Policy Committee's (FPC) assessment of UK bank capital requirements and was subsequently reviewed as one of the principal post-crisis optimal-capital studies in the Basel Committee on Banking Supervision's (BCBS) 2019 literature review of bank capital requirements.
2016
- Saleem Bahaj, Jonathan Bridges, Frederic Malherbe and Cian O’Neill (2016), What determines how banks respond to changes in capital requirements? (SWP 593): This paper looks at the state-contingent impact of increases in capital requirements and shows that banks are less sensitive to them when their legacy assets and lending prospects are good. The findings were consistent with the FPC's approach of building resilience before risks became elevated as reflected in their policy statement on the countercyclical buffer (CCyB). The research was republished in the academic outlet Journal of Finance.
- Rafa Baptista, J Doyne Farmer, Marc Hinterschweiger, Katie Low, Daniel Tang and Arzu Uluc (2016), Macroprudential policy in an agent-based model of the UK housing market (SWP 619): This paper develops an agent-based model of the UK housing market to study the impact of macroprudential policies on key housing market indicators. The model was cited in several speeches by Andy Haldane on economic analysis techniques, big data and data analytics and a book chapter on uncertainty in macroeconomy modelling, It is also cited in Quarterly Bulletin articles about agent-based models and the financial stability of the UK buy-to-let sector. An updated version was published as Staff Working Paper No 976 and in Industrial and Corporate Change.
- Sebastian de-Ramon and Michael Straughan (2016), Measuring competition in the UK deposit-taking sector (SWP 631): Developed several measures of competition for the UK banking sector and examined whether competition improved over the period 1989–2013. The PRA uses the datasets and measures developed as part of this project in monitoring and reporting on competition in its 2022 Annual Report. Published in the European Journal of Finance.
- Sebastian de-Ramon, Bill Francis and Qun Harris (2016), Bank capital requirements and balance sheet management practices: has the relationship changed after the crisis? (SWP 635): The paper examined how capital requirements affect banks’ capital ratios and balance sheet composition. It found that higher capital requirements result in higher capital ratios, achieved by a combination of asset contraction, risk reduction and capital raising. The results informed the PRA’s cost benefit analysis of Basel 3.1. The paper was published in the Journal of Banking & Finance.
2017
- Chiranjit Chakraborty, Mariana Gimpelewicz and Arzu Uluc (2017), A tiger by the tail: estimating the UK mortgage market vulnerabilities from loan-level data (SWP 703): This research produced the first ever estimate of the stock of UK mortgages at individual loan level using data from the flow of new mortgages. It provided alternative estimates to track the tail of vulnerable borrowers. The project was cited in Andy Haldane’s speech on big data and data analytics.
- Jamie Coen, Bill Francis and May Rostom (2017), The determinants of credit union failure in the United Kingdom: how important are macroeconomic factors? (SWP 658): The project developed an early-warning model of credit union failures. It found that a small set of measures related to capital adequacy, asset quality, earnings performance, and liquidity, together with local unemployment rates were useful for early identification of troubled credit unions. The PRA uses the model in its oversight of the credit union sector as discussed by Sam Woods in his Credit union meets robot speech. It was also was cited by James Proudman in his Cyborg Supervision speech as an example of how advanced analytics can be used to enhance effectiveness of supervision. The model was republished in the International Journal of Central Banking.
- Sebastian de-Ramon, Bill Francis and Kristoffer Milonas (2017), An overview of the UK banking sector since the Basel Accord: insights from a new regulatory database (SWP 652): The project developed a database of financial statement and confidential regulatory information on all UK banks and building societies. The paper featured in the Wall Street Journal in 2017. The database is used by PRA and Bank researchers for policy analysis and has been cited in multiple Bank Staff Working Papers including informing relative performance of small and large banks in response to bank regulatory requirements or PRA publications such as PRA consultation paper 5/21 – Implementation of Basel standards and international publications like the International Monetary Fund’s 2022 UK financial system stability assessment (Financial Sector Assessment Program).
2018
- Jonathan Acosta-Smith, Gerardo Ferrara and Francesc Rodriguez-Tous (2018), Bank capital regulation and derivatives clearing (SWP 735): The authors studied the unintended consequence of the interaction of the leverage ratio and the mandatory clearing requirements. The analysis was a key input for some of the conclusions of a BCBS-CPMI report on incentives to centrally clear over-the-counter (OTC) derivative.
2019
- Jonathan Acosta-Smith, Guillaume Arnould, Kristoffer Milonas and Quynh-Anh Vo (2019), Capital and liquidity interaction in banking (SWP 840), an extended version published in the Journal of Financial Stability (2026), and Quynh-Anh Vo (2021), Interaction of capital and liquidity requirements: a review of the literature (SWP 916): These papers contributed to the work of the BCBS on evaluating the impact and efficacy of the Basel III reforms. The first paper provided methodological basis for the analysis of the interactions between capital and liquidity requirements. The third paper formed the basis for the definition of the complementarity and substitutability between regulations used by the BCBS Task Force on Evaluations. The papers were cited in the final BCBS evaluation of the impact and efficacy of the Basel III reforms.
- Zahid Amadxarif, James Brookes, Nicola Garbarino, Rajan Patel and Eryk Walczak (2019), The language of rules: textual complexity in banking reforms (SWP 835): This project examined UK/EU banking regulations before and after the crisis and found that complexity of regulations can be measured not only by the length of the text but also by its structure. It was cited by Andrew Bailey as an example of cutting-edge research at the Bank. The metrics of complexity regulations were cited in the PRA’s 2022 Annual Report in relation to understanding Rulebook complexity and in Sam Woods’s 2019 Mansion House speech in relation to competition and deposit takers growth. The methodology and data were used in discussion paper 1/21 – A strong and simple prudential framework for non-systemic banks and building societies.
- Marco Bardoscia, Gerardo Ferrara, Nicholas Vause and Michael Yoganayagam (2019), Simulating liquidity stress in the derivatives market (SWP 838): The project developed a toolkit to reprice different types of derivatives and compute variation margin calls, allowing the simulation of liquidity stress in derivatives markets. Published in the Journal of Economic Dynamics and Control.
- Joel Suss and Henry Treitel (2019), Predicting bank distress in the UK with machine learning (SWP 831): This paper developed an early warning system for bank distress using regulatory returns and machine learning techniques. It was one of the first examples of employing machine learning informed dashboards for supervisory purposes. The paper featured in the AI strategy and opportunities for central banks speech by James Benford, former Bank of England Data and Analytics Transformation Executive Director.
2020
- Benjamin Guin and Perttu Korhonen (2020), Does energy efficiency predict mortgage performance? (SWP 852): The SWP and/or related journal version published in Economic Letters were cited by various public documents by regulators about climate risks, including the European Commission’s macroprudential frameworks for managing climate risk, FSB’s stocktake on climate risks, and BCBS’s stocktake on banks’ climate change-related risk.
- José-Luis Peydró, Francesc Rodriguez-Tous, Jagdish Tripathy and Arzu Uluc (2020), Macroprudential policy, mortgage cycles and distributional effects: Evidence from the UK (SWP 866): This paper investigates the distributional effects of the loan-to-income limit imposed in 2014 on mortgage and house price cycles in the UK. The paper was cited in Jon Cunliffe’s speech in relation to effects of prudential policy on mortgages. Published in Review of Financial Studies, the paper also formed part of the evidence base for the authors’ later literature review.
2021
- Petros Katsoulis and Eddie Gerba (2021), The repo market under Basel III (SWP 954): This paper investigates the effects of Basel III capital and liquidity regulations on bank wholesale market intermediation. It has been cited in several BIS publications including in the evaluation of the Basel III reforms and buffer usability and cyclicality reports. The paper featured in a speech by Victoria Saporta on the effect of Liquidity Coverage Ratio regulation on banks’ liquidity. Accepted by the International Journal of Finance and Economics.
2022
- Ioana Neamtu, Irem Erten and John Thanassoulis (2022), The ring-fencing bonus (SWP 999): The paper provides evidence on the financial stability effects of ring-fencing. It finds that ring-fenced banking groups were perceived as safer in sterling repo markets. The ‘ring-fencing bonus’ finding was subsequently discussed in public evidence submitted to HM Treasury’s Call for Evidence on aligning the ring-fencing and resolution regimes.
- Ieva Sakalauskaite and Qun Harris (2022), Measuring the effects of bank remuneration rules: evidence from the UK (SWP 1,008): The paper found that for bankers most affected by limits on their bonus to fixed pay ratios (the bonus cap), total pay growth during 2014–19 did not decrease, but compensation shifted from bonuses to fixed remuneration. The paper was published alongside consultation paper 15/22 – Remuneration: Ratio between fixed and variable components of total remuneration (‘bonus cap’) to provide analytical support for the proposed removal of the bonus cap. The findings were subsequently discussed widely in the media, including Financial Times, The Times, and Evening Standard.
2023
- Aakriti Mathur, Ani Rajan and Matthew Naylor (2023), Creditable capital: macroprudential regulation and bank lending in stress (SWP 1,011): This paper investigates the impact of buffer usability frictions on bank behaviour, especially lending, during the Covid-19 stress and the impact of releasing the CCyB during the stress. The paper featured in a speech by Victoria Saporta on prudential lessons from the Covid stress and a speech by Sam Woods on regulatory buffer release. It was also featured in the 2023 FPC countercyclical buffer policy statement and informed the FPC 2025 review of the bank capital framework.
2024
- Marco Bardoscia, Adrian Carro, Marc Hinterschweiger, Mauro Napoletano, Lilit Popoyan, Andrea Roventini and Arzu Uluc (2024), The Impact of Prudential Regulations on the UK Housing Market and Economy: Insights from an Agent-Based Model (SWP 1,066): This paper further develops the Baptista et al. (2016) model and embeds into a macro framework to study the joint impact of borrower and lender-based prudential policies on the housing and credit markets and the wider economy. This research was republished in the Journal of Economic Behavior & Organization.
- Matthew Naylor, Renzo Corrias and Peter Welz (2024), Banks’ window-dressing of the G-SIB framework: causal evidence from a quantitative impact study (BCBS Working Paper 42): This paper finds that the G-SIB framework – a key component of the Basel III macroprudential reforms – generates incentives for the largest global banks to ‘window-dress’ their financial activity at year-end to reduce their capital requirements. Specifically, it is responsible for half of the observed year-end contractions in derivatives, accounting for aggregate reductions of 30 trillion – around 5% of total global activity. This paper underpinned a BCBS consultation paper to address these unintended consequences.
- Aakriti Mathur, Ani Rajan and Edoardo Chiarotti (forthcoming), Distribution restrictions, bank lending, and risk-taking: This is paper investigates the role of the Basel III Maximum Distributable Allowance (MDA) policy as a potential impediment to full buffer usability, both following its announcement and during the Covid-19 stress. The findings contributed to a speech by Victoria Saporta on capital and liquidity, and informed the Basel report on buffer usability and cyclicality in the Basel framework.